Partnering decisions can make or break a company’s value. Pursuing the right partnership deal can ultimately increase a company’s value but conversely, the wrong decision can ultimately kill a company’ value.
Panelists at the BIO CEO & Investor Conference in New York earlier this year discussed the decision-making process and what leaders can do to communicate value.
“CEOs need to relate value to market potential and the potential impact on the patient population,” said J. Michael French, President & Chief Executive Officer of Marina Biotech, Inc.
Relative value roughly equates to the market potential of drugs. Panelists agreed that this information is helpful in telling a story about what the drug will do when it gets to market.
French recommends carefully considering how to drive value for pharma based on market potential, recognizing that ‘market perception and what pharma values is not necessarily aligned.’ Companies need to balance market perception with what pharma wants and think very long-term about what is going to happen within the next five to 10 years.
Most importantly, French advises companies not to cut corners and stay focused on generating good quality data.
All data is not created or interpreted the same way. Al Altomari, President & Chief Executive Officer for Agile Therapeutics, Inc. suggested that data needs to be ‘sticky’ to show the commercial viability of a product.
In addition, Altomari asserted that ‘manufacturing risk is on everyone’s mind,’ particularly as it relates to how we de-risk products.
B.J. Bormann, PhD, Senior Vice President and Global Head of Business Development at Boehringer Ingleheim looks for comprehensive Phase I drugs.
“Nothing moves the needle in a big company except sales. I frequently see companies with molecules in Phase II that are ready for Phase III but there are flaws – that’s not a molecule that’s going to make it to market,” said Bormann.
Bormann added that Phase II drugs are sometimes focused on very small markets, and that those CEOs would benefit from considering what is on the horizon.
“Almost half of companies have drugs with only one indication, it needs to be much broader,” said Bormann.
Gregory Brown, MD, Founder and Managing Director for Cowen Healthcare Royalty shared the investor’s perspective by pointing out that there are ‘lots of snipers in the trees.’
“Theoretically it is possible to exit with small biotechs but not so if they have partnered with pharma,” said Brown. He went on to point out the urgency in making exit decisions by saying, “Investor dwell time is measured in days, not years.”
Altomari chimed in that there is an unfortunate burn rate in companies that is getting higher on exits. “There is a struggle with backfilling early stage companies to try to make them attractive for exits.”
“You cannot save your way to success in this business, you have decide what to jettison,” said Altomari.
Ben Bonifant, Vice President of Business Development Practice at Campbell Alliance moderated the panel.
The BIO One-on-One Partnering system is now open for the 2011 BIO International Convention in Washington, DC on June 27-30. Using this system, attendees are able to research companies and schedule meetings directly with targeted companies. In 2010, the BIO Business Forum hosted more than 17,000 partnering meetings.